Understanding the impact of technical debt on the capacity and velocity of teams and organizations: Viewing team and organization capacity as a portfolio of real options

Understanding the impact of technical debt is critical to understanding a team's velocity. For organizations with multiple teams and products, the impact of technical debt combines non-linearly to impact the organization's velocity. We can think of the capacity of a team as a portfolio. Not all of that capacity can be invested in new features or defect fixing, without incurring negative consequences. A portion of the team's capacity needs to be invested in the ongoing management and reduction of technical debt. This paper describes a simple technique for visualizing, quantifying and tracking a team's technical debt as a portion of their overall capacity investment. The knowledge and insights gained through this technique help with better capacity planning, improved forecasting, and helps to justify the business case for investing in managing and reducing technical debt.

I. Introduction

This paper is part of ongoing research to understand the causes and impacts of technical debt on product development teams and organizations. The context of the research is a large technology organization developing products and systems for real-time voice, video and messaging communications. All of the teams in this organization use an agile approach based on Serum, Kanban, XP, or some combination of these. This organization, like most, is impacted by technical debt. What is needed is a pragmatic and useful way to quickly understand how much technical debt they have, how much they can afford to invest in debt reduction, and the positive or negative impacts of that investment. This paper provides an insight into one aspect of the organization's strategy for managing and reducing technical debt.